In recent years, due to multiple rounds of sanctions from Europe and America, many Western brands have announced their withdrawal from the Russian market, leading to a significant decrease in imports. However, Russias economy has withstood the pressure better than expected, thanks to its implementation of parallel import policies.

Background of the Parallel Import Policy

Parallel imports refer to the importation of original goods into a country without authorization from the rights holder or manufacturer. In response to Western sanctions, Russian President Vladimir Putin signed Federal Law No. 46 on March 8, 2022, amending provisions of the Russian Civil Code regarding trademark and patent protections. This amendment stipulates that Russia will no longer recognize intellectual property and patents from Western countries. Simply put, Russia will no longer protect the intellectual property and patents of Western nations.

As the scale of corporate withdrawals from Russia became clear, Russia legalized parallel imports in late March 2022. On March 29, Russian Prime Minister Mikhail Mishustin signed a government order authorizing the Ministry of Industry and Trade to compile a parallel import list of foreign goods. On May 6, 2022, the ministry published a list covering approximately 200 brands, including...Cosmetics & Personal Carechemical products, clothing, ferrous and non-ferrous metals, vehicles, and 50 other categories of goods. These brands include well-known names such as Siemens, Panasonic, Apple, Intel, Samsung, Dyson, and Logitech. The Ministry also emphasized that the list would be reviewed quarterly or bi-monthly, with additions or removals based on product monitoring.

Legalization of Parallel Imports and Market Impact

Shortly after the foreign goods list was announced, Shaskolsky, head of Russias Federal Antimonopoly Service, suggested that Russias parallel import mechanism should be extended to all categories of goods, stating it should become a permanent mechanism for the Russian Federation. On June 21, 2022, the State Duma (lower house of parliament) approved a government-submitted legal amendment legalizing parallel imports in Russia.

Yandex.Market, one of Russias largest online shopping platforms, established a new department for parallel imports and has issued multiple international procurement tenders seeking new supply channels for household appliances, power tools, electronics, health products, etc., to expand direct imports. With the governments legalization of parallel imports, Russian businesses have built alternative supply chains, importing restricted goods through third countries, effectively alleviating product shortages.

According to data from Russias Trade and Financial Services Agency, parallel imports can reduce costs for consumers by up to 50%. Data from the Russian Federal Customs Service shows that parallel imports in 2022 exceeded $20 billion. Sergei Puzyrevsky, Deputy Head of the Federal Antimonopoly Service, recently expressed support for permanently legalizing parallel imports as a long-term strategy to counter sanctions.

Optimizing Parallel Import Policy and Future Outlook

As the parallel import policy continues to evolve, Russia plans to adjust the number of brands allowed for import to optimize market structure, ensuring only those brands with genuine demand and positive effects enter the market. Recently, Russian First Deputy Prime Minister Denis Manturov announced that the parallel import list would undergo a new review and might be reduced. As domestic production of high-quality goods increases and supply expands, opportunities for parallel imports will gradually diminish.

A local Russian importer commented: Sanctions have opened many new windows of opportunity while closing some old ones. During stable economic times, all markets were already allocated. If youre not a genius like Musk, starting from scratch was quite difficult. But transformative times create new markets that are easy to enter. For example, after the Soviet collapse, everything was scarce. People made millions selling gum and Snickers. Crises always bring new opportunities.